Fuel and power group mainly contributed to increase in inflation in July 2013. The WPI inflation has moved past the central bank's comfort zone. The RBI has said it can tolerate inflation up to 5%. RBI has also imposed partial capital controls on companies and individuals to stabilize the rupee. This means local corporate companies may find it difficult to buy overseas assets. This restricts the overseas remittances by locals to $75,000 a year from $200,000, and also curbs investments in overseas property.

What to expect from the markets now?

Yesterday, the US stocks had posted one of the biggest losses in the recent time owing to poor results and outlooks from Dow components Wal-Mart and Cisco. As per the Singapore trades the Nifty was down by 32 points at the time of posting this newsletter. Nifty may come back to 5750 but the indices are still in the bearish mode as long as it trades below 5950. The current policies are not good enough to take the economy in forward mode. We have to be careful with the longs at least for the short term trades.